Academic and Professional Skills: Volkswagen Ethical Practices Report

This report provides an executive summary analyzing the ethical failures of Volkswagen, a multinational automobile manufacturer. The study examines the role of ethics in an organization, highlighting the consequences of unethical practices in the context of the Volkswagen emissions scandal. The analysis covers the company's actions, the measures needed to ensure ethical conduct, and the impact on stakeholders, including customers, shareholders, and the environment. The report also explores the importance of corporate social responsibility, research and development, restructuring, and fostering a whistle-blowing culture as recommendations for Volkswagen to regain its market position. The report emphasizes the critical role of ethical behavior in business success, illustrating how unethical decisions can lead to significant financial and reputational damage.

Academic and
Professional Skills

Executive Summary
“Do what is right and necessary, not what is easy.”This famous quote has exactly
described the status of this report. Volkswagen is a German multinational company dealing in
auto mobiles. This study revolves around the ethical practices which are rotating around
Volkswagen. Ethics is a behaviour which makes an organisation. Ethics can be considered as a
code of conduct followed by an organisation in order to establish an effective and efficient
management. These are not necessarily rules and regulations which needs to be followed, but,
they are an efficient set of principles whose absence can destroy an organisation, same happened
with Volkswagen.

Table of Contents
INTRODUCTION...........................................................................................................................1
Analysis............................................................................................................................................1
Role of ethics in an organisation.................................................................................................1
Measures an organisation can take to ensure ethical practices...................................................3
CONCLUSION................................................................................................................................5
RECOMMENDATIONS.................................................................................................................5

INTRODUCTION
Academic and professional development is a crucial part of every individuals as these
factors has a major influence on life led by others. It refers to the process of improving and
increasing the capabilities of an individual by providing access to education and training
opportunities in the workplace. A professionally developed individual always have better ability
in performing any task as he is educated in an effective manner (Brown and et. al., 2018)
Volkswagen is a germen multinational automobile manufacturing company, that
manufactures car and sells it on a global level. The company was founded in 1937 in
Berlin,Germany and is owned by Autrian Porsche - piech family. Das Auto Das Auto is the tag
line of this brand, it means “The Car”. The company deals in manufacturing cars, motorcycles,
turbo machinery and commercial vehicles and provides various services such as banking,
finance, insurance and lease financing.
The company came into headlines in 2015, when it was caught doing unethical practices
of cheating their customers, government and the environment. The case occurred because of
engineers who were not able to develop a car which can meet the quality standards of customers.
The study will cover some part of academic and professional development. This study has been
conducted in order to have full knowledge about Volkswagen case and how the unethical
practices led the company to failure. In this report major importance is given to ethics which
should be prevail in an organisation such that the overall performance of the organisation could
be improved.
Analysis
Role of ethics in an organisation.
Ethics are the moral judgements or principles that governs the conduct of an activity. It
help the individuals in building trust towards the organisation. Business ethics are the moral
values and principles that guides the way in which business behaves. Behaving in an ethical
manner involves distinguishing between 'right' and 'wrong' and then making the right choice
from them. In the modern scenario, every organisation needs to have a certain set of ethics which
should be followed, in order to establish a good position in the market and a strong relationship
with the customers, suppliers and market intermediaries (Burchardt, 2015). It refers to business
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values which are created by analysing internal and external factors present in the environment.
Understanding business ethics helps in efficient running of the business. Ethical behaviour helps
in attracting customers to the firm, make employees want to stay in the business which will
eventually reflect in boosting the productivity of employees, sales and profits of the organisation.
Country, culture and experiences of the founder plays a major role in establishment of ethics in
an organisation.
The factors have a huge impact in the success or death of an organisation. Unethical
behaviour may lead to damage the goodwill and reputation of the firm and profit could fall as
well (JuneCastañeda-Peña, 2018). If an organisation has a good image in the market and is able
to attract and satisfy the need of customers, then there are huge chance for that organisation to
taste success whereas in case, if the organisation is able to attract and build relationships with
customers, suppliers and market intermediaries than that organisation might not taste success and
profit will also be declined.
By taking the case of Volkswagen, where the unethical practice led them to bear huge
losses. The case here was that Volkswagen, a multinational automotive company was not able to
develop or create a product which could meet the quality standards as well as can meet the US
carbon emission policies. In order to hide the fraud about carbon emission, Volkswagen made a
device to fool the Environment Protection Agency (Tessuto ans et. al., 2019). It was
International council on clean transportation (ICCT) who was able to detect the fraud by
performing some test. They performed the test by setting BMW as a standard and as a result it
was founded that 4,80,000 diesel cars are producing large amount of carbon emission which was
polluting the environment.
By the conduct of this fault, Volkswagen fully ruined its goodwill created by them all
over the years and has boosted the profit earning capacity of the organisation. In context of
ethics, the organisation not only broke the trust of consumers but it also cheated various
stakeholders(JuneCastañeda-Peña, 2018). Customers of Volkswagen have to pay high taxes of
their vehicle as now the car has been categorised on higher level now. This conduct turned the
profit margin into huge losses as the organisation has to bear loss of 1.5 billion in 2015, which
was very hard to fill.
From the context of Volkswagen, it can be analysed that ethics in business plays a very
important role in success and failure of an organisation as it play a key role in decision making
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regarding business and in this case of Volkswagen it has been proven as a demise as it did not
considered any of the government regulations, broke the trust of consumers and at the same time
declined goodwill and profit of the firm (Weymann, 2016) ..
Measures an organisation can take to ensure ethical practices.
Now a days it is necessary for organisation to take some measures in order to ensure
ethical practices. Because these measures helps organisation in the level of business. Various
steps are required to be taken by Volkswagen to ensure that the flow of activities as the company
was not able to justify the ethical behaviour because of some ethical issues which were followed
there(KANKURUBAHeinrichs, Dev and Davies, 2018) . These ethical issues are: Opportunity : It refers to the cheating that could have been avoided. It refers to the
opportunity that occurred because of ignorance of several individuals from top
management to the software engineers who created such software. This suggests that this
ethical issue could have been avoided if the proper knowledge of ethics was provided to
employees. Pressure : It is a major issue faced by Volkswagen. The basic rule followed there is to
have every employee trained ethically and have proper knowledge of the work.
Employees working there were not able to perform well because of the pressure exerted
by the top management, as the leadership was not effective (Politis and et. al., 2017)
(Ponce Gómez, López Cruz and Carmona Mejía, 2018)..
 Rationalization : Because of carbon emission policy in 1970 the company had to pay
$1,20,000, to get free from such malpractices. So better policies are required to be formed
to establish better ethical practices.
These ethical issues contributed in showing various problems faced by Volkswagen as
stakeholders there faced many some problems out of it. Certain expressions were used there to
shoe it. They are: On Managers : Though managers working there were already aware of the misconduct
that was about to take place but pressure made them do it. Managers over there asked
their software engineers to create a defect device, it is where the unethical behaviour
established. This depict the role of software engineers was to realise what they are doing
is unethical and will not be accepted(Zilberbrant and MacKenzie, 2016).
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 On Customers : Customers play an important role in the success of every business as
they are the whole and sole of the organisation. Because of the fraud of Volkswagen,
customers lost their trust from the organisation as they feel cheated, just for the sake of
making profit . On Shareholders : Shareholders faced many problems because of this unethical conduct
of defect devices at Volkswagen. The company experienced losses of about $1.5 billion
which was paid by the shareholders of the organisation. On Revenue : When this miss-conduct occurred Volkswagen did not generated any profit
that year as they acquired lots of losses. The customers started returning the cars and
those of all who have ordered the car they have cancelled those orders. It created a
negative impact on the profit margin of the company.
 On Environment : Environment constitutes all those factors which are affecting the
natural phenomenon. (Lau, 2017). A business must be developed without causing any
harm to society which in case of Volkswagen disguised the environment at a huge
extinct, as due to large carbon emission excessive toxic fumes were released due to
which lots of premature deaths incurred in the world.
Several measures can be considered for better ethical practices at Volkswagen. They are: External measures : In order to establish an ethical behaviour, in context of external
environment Volkswagen can try to organise and maintain a quality check to reduce the
amount of pollution to some extinct. The company can also organise random checks on
vehicles running in order to make sure that the car is not causing harm to the individual
driving it.
 Internal Measures : In order to establish an ethical behaviour, in context of Internal
environment Volkswagen can provide knowledge to the employees in the ethical conduct
and can expect the employees to follow it in future. The company can maintain a stable
environment by not pressuring the employees working over there because if the managers
will pressurise the employees then employees might use some unethical methods to meet
the needs of the organisation.
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CONCLUSION
From the above case, it has been analysed that ethics plays an important role in the success and
development of every organisation because when ethics are not followed in the business dispute
may arise between customers,suppliers, etc. and when ethics are followed in business Then each
and every individual is treated equally, make society better and proper management of work is
done. In the case of Volkswagen, the unethical behaviour led the organisation to demise which
happened because of the involvement of top management in creation of defect device in order to
hide the carbon emission by the vehicles. By evaluating the case it can be said that ethics helps in
defining the values and culture which are prevailing in the organisation. So by this study it is
justified that a business can gain profit without hurting the values and beliefs of an individual at
the same time.
RECOMMENDATIONS
From the above mentioned case of several recommendations has been provided to Volkswagen
in order to take their old position in the market. These are as follows: Corporate social Responsibility : Volkswagen should try to focus on its corporate social
responsibility so that it can create better image of the organisation and can build a better
working environment as CSR contributes in sustainable development of an organisation. Proper Research and Development : Volkswagen can properly make research on the
situations prevailing in the market and by analysing the need of customers they could
develop the product which will help in generating maximum amount of profit. Re-structuring : Volkswagen can re-structure their brand in order to make better-
decisions as the board of the company were already aware of the misconduct which may
hamper the future prospects of Volkswagen. So, for establishment of better ethical
practices the company can restructure the board. Whistle-blowing culture : It refers to undercover operations done by the people to know
the reality of something, This action is performed to know if any fraud is taking place in
the environment. As this is the only technique which led Volkswagen to failure . By
developing some restrict measures the organisation can restrict the insider to not share
company's information to any outsider.
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 Environmental Awareness : It refers to aware the business environment about what is
going on in the external environment. Volkswagen can develop a separate environmental
department which will help the organisation in rising the awareness towards the
environment as auto mobiles are considered as one biggest source across the globe which
is polluting the environment. This department can establish some standards in regard of
product such that the product will emit less carbon and will be more environment
friendly.
These recommendations will help Volkswagen in performing efficient operations at the
workplace.
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REFERENCES
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